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Kentucky Approves Gas-cost Incentives

Fortnightly Magazine - October 15 1996

The Kentucky Public Service Commission (PSC) has approved two gas-cost incentive programs proposed by Columbia Gas of Kentucky, Inc., a natural gas local distribution company (LDC). Under the first phase of the experiment, the LDC will retain 35 percent of its offsystem sales, returning 65 percent to ratepayers. Phase two allocates to ratepayers all capacity-release revenues received by the company up to a benchmark level. The LDC will retain all capacity-release revenues beyond the benchmark, up to a set ceiling beyond which revenues will be split 65 percent to ratepayers and 35 percent to shareholders.

The LDC had proposed a 50/50 split of the offsystem sale revenues, but the PSC found that some sales might be bundled with capacity paid for by ratepayers. The PSC also noted that all sales would be affected by LDC resources developed to provide public utility service. It modified the LDC's capacity-release proposal by including the benchmark based on historical capacity-release data to ensure that ratepayers continue to receive the full benefit of the company's supply-management efforts. Re Columbia Gas of Ky., Inc., Case No. 96-079, July 31, 1996 (Ky.P.S.C.).

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